Published April 06, 2011 17:17
The Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation have drafted consent decrees with the nation’s largest mortgage servicers that would purportedly improve their foreclosure practices. These legal agreements represent an inadequate attempt by regulators to address illegal servicing practices that have caused countless people to lose their homes.
In response, a broad consortium of national labor, civil rights, consumer, and community organizations signed onto a letter to federal regulators that demands the withdrawal of the proposed orders and urges federal regulators to work with the state Attorneys General and the United States Department of Justice to create a meaningful agreement that holds banks accountable for illegal and abusive practices.
The consent decree provides minimal guidance to banks regarding topics like document handling and account management. Further, it allows banks to hire independent consultants to assess their practices over the last two years—essentially handing over enforcement to bank’s internal controls. The agreement provides no redress for the countless homeowners who have already suffered from bank’s abusive practices.
“Regulators need to stop catering to banks and start prioritizing homeowners and neighborhoods,” says Kevin Stein, Associate Director of the California Reinvestment Coalition. “Regulators are acknowledging that mistakes have been made, and yet this agreement does nothing to prevent this from happening in the future.”
“For too long, our hardworking middle-class homeowner clients have been harmed—to the point of losing their homes—by banks’ shoddy servicing practices,” says James Zahradka, Supervising Attorney at the Law Foundation of Silicon Valley and Chair of CRC’s Board of Directors. “With these inadequate proposals, the federal regulators are not holding the banks to their side of the bargain after the United States taxpayers saved them from their own greed with billions of dollars.”
The nation’s Attorneys General are conducting a comprehensive investigation that would include much broader efforts to institute specific and protective measures that include principal reduction on loans, monetary penalties for illegal servicing behavior, and protections for homeowners going forward. By issuing these consent decrees, federal regulators are undercutting actions at the state level instead of cooperating in a stronger, comprehensive agreement.
In California, the advocates who signed onto the letter include the California Reinvestment Coalition, Housing and Economic Rights Associates, Advocates for Neighbors, Affordable Housing Services, Causa Justa::Just Cause, CCISCO, Fair Housing Federation, Fair Housing of Marin, Greenlining Institute, Korean Churches for Community Development, Law Foundation of Silicon Valley, Project Sentinel, Vallejo Neighborhood Housing Services, Community Housing Development Corporation of North Richmond, Community HousingWorks, Fair Housing Council of the San Fernando Valley, Legal Aid Foundation of Los Angeles, Neighborhood Housing Services of the East Bay, and Community Economics.
Read the full letter (PDF).
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The California Reinvestment Coalition advocates for the right of low-income communities and communities of color to have fair and equal access to banking and other financial services. CRC has a membership of more than 280 nonprofit organizations and public agencies across the State.